REOC San Antonio
Commercial Real Estate Since 1974   
Kim_Gatley
Kim Gatley
S
enior Vice President & Director of Research at REOC San Antonio

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REOC San Antonio releases 1Q 2010 Retail stats

Source: REOC San Antonio

The retail real estate market in the Alamo City weakened over the past year in response to the dampened national economy.  According to the survey of nearly 45 million square feet of retail space, citywide vacancy for all property types combined ticked up to 13.8% at the close of the first quarter versus 13.7% last quarter and 13.6% recorded in the same quarter last year.  

After posting steady gains for nearly a decade, landlords began pulling back quoted rental rates last year and offering increased concession in an attempt to attract and retain tenants.  The citywide average quoted triple net rental rate retracted five cents from last quarter to settle at $17.80 per square foot annually, down forty-three cents or 2.4% compared to a year ago.

Absorption, a useful measure of leasing demand, was also flat in the first quarter with a negligible net gain of only 6,949 square feet in the first quarter reflecting higher tenant vacancies and limited new construction.  With demand still so anemic, especially from national retail chains, and the credit market still frozen, the list of new projects for 2010 remains short.

The latest Commerce Department report showed that consumer spending in the U.S. rose in March by 0.6% – the most in six months.  Another promising sign for retailers was the strong March chain store sales performance reported by International Council of Shopping Centers (ICSC).  Spending is good for the market, especially given that it makes up about 70% of the U.S. economy, but the concern is that personal income in March rose only 0.3% – so, consumers may be outspending their wages which is not healthy or sustainable.  Leasing activity seems to be picking up a little compared to last year and growth in the outlying areas like Seguin and the I-35 corridor continues to attract retailers and quick-serve restaurants.

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